The World Trade Organization at 20

January 12, 2015
IF10002

January 12, 2015
The World Trade Organization at 20
Overview
The World Trade Organization (WTO) was established on
January 1, 1995, following the ratification of the Uruguay
Round Agreements (URA). It succeeded the General
Agreement on Tariffs and Trade (GATT), which was
created in 1947 as a part of the post-WWII effort to build a
stable, open international economic framework. The WTO
has three basic functions: (1) administers existing
agreements; (2) serves as a negotiating forum for new trade
liberalization; and (3) provides a mechanism to settle trade
disputes among the parties. WTO agreements cover goods,
services and agricultural trade, remove tariff and nontariff
barriers, and establish disciplines on government practices
that directly relate to trade—for example, trade remedies,
technical barriers to trade, customs valuation, intellectual
property rights, and government procurement. The WTO
agreements are based on the principles of
nondiscrimination, national treatment among countries, and
transparency of trade rules and regulations. Some
exceptions, however, such as preferential treatment for
developing countries and regional and bilateral free trade
agreements (RTAs), are allowed.
The Doha Round
The Doha Development Agenda “round” of multilateral
trade negotiations was launched in November 2001. The
negotiations have been characterized by persistent
differences among the United States, the European Union
(EU), and developing countries on major issues, such as
agriculture, industrial tariffs and nontariff barriers, services,
and trade remedies. For example, developing countries
(including emerging economic powerhouses such as China,
Brazil, and India) have sought the reduction of agriculture
tariffs and subsidies among developed countries,
nonreciprocal market access for manufacturing sectors, and
protection for their services industries. In contrast, the
United States, the EU, and other developed countries have
sought commercially meaningful access to developing
countries’ industrial and services sectors while attempting
to retain some measure of protection for their agricultural
sectors. The growing clout of developing countries—which
played a peripheral role in the early days of the GATT—as
well as the increasing complexity of the negotiations, have
contributed to the stalemate.
The Bali Ministerial
The Bali package, an agreement reached at the WTO
Ministerial in December 2013, consists of new
commitments on trade facilitation, agriculture, and
development that were agreed by the Members.
Trade Facilitation Agreement (TFA)
One of the new commitments, the TFA, aims to remove
customs obstacles at the border. Its provisions:
• Establish “single window” procedures for accepting
trade documentation;
• Require expedited release of goods into air cargo
facilities;
• Institute trusted trader programs for screened operators;
• Provide for pre-clearance customs procedures and postclearance audit procedures;
• Establish electronic payment for customs duties and
advanced rulings for tariff classifications; and
• Mandate binding commitments for countries
implementing reforms and countries providing trade
capacity building.
Countries are to decide whether each commitment is to be
implemented upon the agreement’s entry into force; within
a set time period after the entry into force; or implemented
subject to the provision of technical assistance by
developed countries and, where possible, advanced
developing countries. Members were required to begin the
ratification process by notifying the WTO by July 31 of the
trade facilitation commitments they plan to implement upon
entry into force, with other commitments to follow. The
future of the agreement was thrown into doubt when India
blocked this process from beginning due to its desire to
protect its food security subsidy programs from WTO
scrutiny. In November 2014, however, the United States
and India negotiated a compromise creating a “peace
clause” to protect these programs from challenge pending
negotiations on their future, while allowing the overall
agreement to be implemented.
We have put the world back in the World Trade
Organization. Roberto Azevêdo, WTO Director
General, December 7, 2013.
Agriculture and Development
The agriculture and developmental aspects of the Bali
agreements contain more hortatory commitments. These
include a temporary peace clause for a developing country’s
purchases of commodities for food-security stockholding
programs—which, to some, represents a backtracking from
previous Uruguay Round commitments; a reaffirmation to
eliminate export subsidies as part of the Doha Round;
commitment to a successful outcome in cotton negotiations
with least-developed countries (LDCs); a renewed pledge to
improve duty-free, quota-free (DFQF) market access for
LDCs; the adoption of simplified rules-of-origin for
preference programs; and a services waiver for service
exports from LDCs.
www.crs.gov | 7-5700
The World Trade Organization at 20
Table 1. GATT/WTO Rounds
Year
Name
Subjects covered
Countries
19471961
Geneva,
Annecy,
Torquay,
Geneva II,
Dillon
5 Rounds of tariff
reductions
23 (1947); 26
(1961)
Kennedy
Tariffs and anti-dumping
measures
62
Tokyo
Tariffs, anti-dumping,
subsidies, technical
barriers to trade,
government
procurement
102
19861994
Uruguay
Tariffs, nontariff
measures, rules, services,
intellectual property,
123
dispute settlement,
textiles, agriculture,
WTO institution
2001-
Tariffs, nontariff
measures, agriculture,
Doha
services, trade
Development
facilitation, trade
Agenda
remedies, and
development
19641967
19731979
negotiations for an Environmental Goods Agreement
(EGA) were announced in January 2014 by 14
countries, including the United States and China,
representing 86% of global trade in such goods. The
talks are expected to be handled as an open plurilateral,
i.e., the agreed tariff reduction or elimination would be
applied on a most-favored-nation (MFN) basis to all
WTO members, similar to the ITA
Future Challenges
142 (2001);
160 (current)
The successful conclusion of the Bali Ministerial has
infused new life into the Doha Round agenda. In Bali,
Ministers committed to revise their work program in 2014
to bring the negotiations to a conclusion. However, the
WTO continues to face several challenges to its effective
stewardship of the global trading system.
The Doha Round. After 13 years, many intractable issues
remain unresolved. While developing countries remain
focused squarely on agriculture, developed countries have
linked ambition in agriculture to reciprocal ambition in
industrial tariffs and services liberalization, especially for
advanced emerging market economies. These divisions
have called into question the viability of the “single
undertaking” (one package) type of negotiation and the
need for institutional reform.
Dispute Settlement. The dispute settlement (DS) system is
considered a success of the existing WTO system. Some are
concerned about the continued legitimacy of the DS system
if no further WTO agreements are reached.
Table 2. WTO Dispute Settlement
Source: WTO.
Total cases filed
488
Other Initiatives
U.S. as Complainant
107
Aside from the agreements reached at the Bali Ministerial,
several other initiatives are taking place within and around
the WTO. These include a new Government Procurement
Agreement and plurilateral negotiations on:
• Expanded product coverage subject to tariff-free
treatment in the 1996 Information Technology
Agreement (ITA). The impasse over China’s request for
extensive exclusion of some goods from tariff cuts, and
long phase-out periods for others was tentatively
resolved by bilateral U.S.-China consultations during
the 2014 Asia-Pacific Economic Conference (APEC)
summit in Beijing. However, objections raised by other
countries have yet to be resolved.
• A Trade in Services Agreement (TISA). Launched in
April 2013 among 23 countries, including the EU, it
seeks to expand commitments to the WTO General
Agreement on Trade in Services (GATS). While this
negotiation is not being conducted under the auspices of
the WTO, it may be incorporated into it in the future.
China has expressed interest in joining the TISA
negotiations, but the United States has sought
preconditions on China’s membership to assure an
ambitious outcome.
• Tariff elimination for environmental goods.
Contemplated in the Doha Round for several years, new
U.S. as Respondent
123
U.S. as Third Party
118
Source: WTO.
Regional Trade Agreements. RTAs have proliferated in
recent years. They have the advantage of willing
participants, common goals, and the potential to negotiate
more comprehensive liberalization. They may serve as
trailblazers for talks on new issues and potentially could be
linked up with the WTO system in the future. At present,
though, they call into question the role of the WTO in
negotiating new trade liberalization.
New Issues. Since the launch of Doha Round 2001, new
issues, such as digital trade (data flows, cybertheft, and
trade secrets), state-owned enterprises, new nontariff
barriers, global supply chains, and the relationship between
trade and environment rules are new challenges to the
trading system. Some fear the WTO is falling behind, while
these issues are being left to plurilateral or regional FTAs.
Ian F. Fergusson, ifergusson@crs.loc.gov, 7-4997
www.crs.gov | 7-5700
IF10002